The economic geography of a universal basic income

Adam Ozimek has been doing some great work lately on the importance of helping the smaller, struggling places left behind as America’s economic center of gravity has shifted toward a few prosperous metropolises.

This is extremely refreshing. For years, the economic conversation has been dominated by the “moving to productivity” story, the intriguing but flawed idea that the way to a better and more prosperous country was simply to encourage migration into the cities where, by the numbers, people seem to be unusually productive. The most widely discussed problem with “moving to productivity” is the rigidity of urban housing supply. Evacuating the hinterlands into existing, built-up cities would require more housing supply dynamism than stable, prosperous communities seem likely ever to tolerate. We are left with a continuing war between immigration enthusiasts and urban “incumbents” who see themselves as working to preserve their homes and communities. (I’ve weighed in on this controversy, here, here, and here.)

But there are many other problems as well. Measured production per hour worked is higher in leading cities for sure, but how much of that is a selection effect? Baumol’s cost disease ensures that, for an individual, immigration to high productivity cities will lead to higher wages even for lower productivity workers. But it’s a fallacy of composition to imagine that can scale. At an aggregate level, the productivity edge of prosperous metropolises may be caused by a “creaming” of those who might be productive elsewhere but are drawn by urban amenities and can afford the prices. Or perhaps cities do indeed enhance the productivity of their populations, but only because the residents who self-select and then pay up to live in them are unusually suited to take advantage of often industry-specific opportunities. In either case, less selective immigration would blunt cities’ productivity edge. Or, suppose that it is not selection, that the higher measured productivity of large, dense cities arises because dense copresence makes new forms of collaboration, specialization, and trade practical (“agglomeration effects”, in the lingo). Then how much of the apparent productivity effect is due to improved collaboration in production, and how much of it is due to improved collaboration in contesting for economic rents? High-powered cities include concentrations of highly paid lawyers, financiers, and other professionals who collaborate intensively at least in part to maximize on behalf of themselves and their clients the share of production they capture, rather than to increase the overall level of production. Businesspeople in cities may be unusually capable of coordinating to exercise monopoly power and restrict production. The dollar value of expensive professional services and artificially overpriced products then gets incorporated into “gross metropolitan product” and productivity statistics. If big, dense cities confer advantages in a zero- or negative-sum game to capture economic rents, by the numbers they would look like the most productive places in the country when in fact they might be among the least.

To be very clear, I don’t think cities are in fact “a zero- or negative-sum game”. I think cities excel at encouraging both good and bad sorts of collaboration, but their virtues far outweigh their costs. Even if you buy the rent extraction story, there is little reason to think there would be less rent extraction overall under a different geographic reality. Rents might just be distributed differently. In the zero-sum game of baseball standings, a city like New York can put together an unusually dominant team like the Yankees. But without New York, the game would still be played and there would still be winners and losers every year. Rents can be and long have been extracted by monopsony employers in smaller towns, for example. Regardless, the geographic distribution of rents may not match the geographic distribution of production, and empirically the two are difficult to disentangle.

Also, if part of the apparent productivity advantage of larger, denser cities is due to creaming, then we have to consider the flip side: a brain and talent drain out of smaller, less dense places. If certain kinds of talented people exhibit positive spillovers, that is, if they inspire and organize activity that creates value for other members of their communities that they cannot themselves capture, it may be individually rational for them to leave smaller communities for the big city, but socially very costly. The marginal contribution of one unusually talented person to the productivity a big city already chock full of talented people may be much smaller than the marginal cost to a community with many fewer talented people of losing that person.

Cities are great, but I think the claim that everybody moving to the very largest cities would yield a massive, otherwise unachievable, productivity boost is as implausible as it is impractical. Historically, economic activity was far less concentrated during the decades when America enjoyed its strongest growth. Perhaps technology has changed everything. But perhaps much of the apparent productivity advantage enjoyed by large, powerhouse cities over medium-sized cities is due to creaming, sorting, and particularly high-powered coalitions of rent-extractors, rather than hypothesized quadratic-returns-to-scale human connectivity effects.

Then, of course, there is all the stuff that economic analysis tends to overlook: Community, history, attachment to family, attachment to the land itself, the perhaps quaintly aesthetic notion that a civilized country should not be composed of gleaming islands in a sea of decay and poverty. And politics. Politics seems to be a thing now. Rightly or wrongly (and I think the question is more complicated than many of us acknowledge), the United States’ political system enfranchises geography as well population. (This is not unique to the United States and the compromises made over slavery in the drafting of our Constitution. In the EU, for example, many actions require unanimity among member states, giving citizens of tiny Malta rather disproportionate influence.) In the American system, piling people into a few, dense cities is a sure recipe for disenfranchising most of the humans. A nation of mid-sized cities distributed throughout the country would both spread the wealth geographically and yield a more balanced politics than the dream of hyperproductive megacities.

An underdiscussed virtue of a universal basic income is that it would counter geographic inequality even more powerfully than it blunts conventional income inequality. By a “universal basic income”, I mean the simple policy of having the Federal government cut periodic checks of identical dollar amounts to every adult citizen, wherever they may live. Importantly, a universal basic income would not be calibrated to the local cost of living. Residents of Manhattan would receive the same dollar amount as residents of Cleveland. But a dollar in Cleveland stretches much farther than the same dollar in Manhattan. The value of labor income covaries with place. Moving from Cleveland to Manhattan requires paying higher rent, but it may also yield higher pay. Real labor income may rise or to fall from such a move, depending on the individual. There is no such ambiguity with UBI checks. Migrants to high-cost of living cities would take a cut in real terms on the UBI portion of their income. Emigrants from high-cost-of-living cities would get a raise that might partially compensate for lower payscales. At the margin, for those willing to let economics guide their choice of home, UBI would shift demand from expensive capitals to cheaper mid-sized cities, and take some of the pressure off of powerhouse city housing markets. A UBI would tilt the residential playing field towards a country with lots of vibrant, geographically dispersed cities rather than a few “closed-access” capitals. (See also Conor Sen.)

Of course, not everyone is willing or able to treat their choice of home as an income maximization problem. Many people will remain, for better or for worse, in the communities where they were raised, rooted by place or family or church, by love, fear, stewardship, or poverty. For these people, a UBI would bring some measure of prosperity to where they are, rather than requiring them to succumb to the discipline of a dynamic national labor market. In a fascinating post, John Michael Greer writes:

What’s more, the working class people who point to a lack of jobs as the cause of middle America’s economic collapse are dead right. The reason why those tens of thousands of American communities are economically devastated is that too few people have enough income to support the small businesses and local economies that used to thrive there. The money that used to keep main streets bustling across the United States, the wages that used to be handed out on Friday afternoons to millions of Americans who’d spent the previous week putting in an honest day’s work for an honest day’s pay, have been siphoned off to inflate the profits of a handful of huge corporations to absurd levels and cater to the kleptocratic feeding frenzy that’s made multimillion-dollar bonuses a matter of course at the top of the corporate food chain. It really is as simple as that. The Trump voters in the neighborhood south of my home may not have a handle on all the details, but they know that their survival depends on getting some of that money flowing back into paychecks to be spent in their community.

Often people (foolishly, ridiculously) think of a universal basic income as a substitute for work, and imagine that UBI would lead to a world in which most people would sit around collecting government checks and masturbating all day. The same people often emphasize the importance of work to living a meaningful life, and argue that we ought not deprive people of this virtue by giving them money. But giving people money does not eliminate the social and spiritual benefits that come with being active, valued, and productive. In affluent communities, capital income seems to coexist just fine with a strong work ethic and perhaps too much ambition. Wealthier people sometimes do take advantage of their liberty to be productive in ways that don’t yield low-risk labor income, such as starting up uncertain businesses. In poorer communities, starting up businesses that aim to cater to a local clientele is particularly dicey, since many customers lack sufficient income to pay for all but the most basic goods and services. We can argue at a national level about fiscal policy and monetary offsets, but at a local level, in underemployed communities, crude Keynesian multipliers obviously obtain. Income begets economic activity and economic activity begets income. A UBI, unlike means-tested welfare programs, does not discourage work or create poverty traps. If financed with a progressive income tax, a UBI would not increase effective marginal tax rates until relatively high levels of income. A UBI does affect labor supply by increasing peoples’ reservation wage. People with no other income sources accept shitty work at low pay. People with a UBI might not. But since humans do in fact value productive activity, UBI recipients in poor communities are likely to accept decent work at modest pay, or go back to school, or care for children and aging parents, or try starting businesses. Income is the difference between communities that are slovenly and decaying and communities that are ordered and active. Income is precisely what a UBI provides, to communities, via individuals.

We are all learning, I think, just how dangerous to a national community, and to any hoped-for transnational community, inequality between localities can become. National community depends on the idea that “we”, all citizens, are in it together. Inequality at an individual level renders that not-necessarily-true, a rising tide may leave some boats sunk. But as long as those who are drowning are scattered and atomized, perhaps a polity can muddle through just ignoring them. Unfortunately (or fortunately), wealth and poverty are not uniformly distributed. They coalesce into geographies, and then into communities segregated by place and often by race, which organize and act politically. Sometimes prosperous communities can simply disrupt and suppress less fortunate communities — c.f. colonialism or Jim Crow or slavery. Hopefully readers will not find those attractive models for managing the political fault lines emerging within the United States and Europe. A better approach is to reduce the disparities between communities, to marry our fortunes together. We’ve all come to look for America. A UBI is one tool that might help us to find it.

Let us be lovers.

Acknowledgments: I first encountered the “moving to productivity” story in a talk Ryan Avent gave at an Kauffman Foundation economic bloggers’ conference. Avent has become a delightfully textured thinker on these issues, see e.g. here. You can also read his new book, which is excellent. (He sent me a free copy. If you think that’s why I’m recommending it, well, that’s what you think!) Much of my thinking about urban housing and our increasingly painful geographic stratification was inspired by Matt Yglesias’ work as well. The best excellences are the ones you disagree with, that inspire you to mull, then argue, then hopefully to talk.


86 Responses to “The economic geography of a universal basic income”

  1. Unanimous writes:

    I disagree. People differ in their self motivation, but a majority can over time get quite comfortable living a modest but lazy life. Have you been to a third world country?

  2. Ravi writes:

    I think a UBI would be wonderful. And reading this made it occur to me that part of the success of Social Security is that it is sort of like a UBI for the elderly (especially when it started).

    But that also reminded me about the ugly, ugly compromises that had to be made to get Social Security off of the ground (e.g. agricultural workers).

    Is a truly universal basic income anywhere near politically feasible? Is it the kind of proposal that could have turned the election (or flip the House in 2018)? Or would it just reinforce existing divides or be a net loss? Note that minimum wage increases didn’t move this needle even though they are broadly popular and currently have effective messaging behind them.

    Do we need to be looking for similar compromises for today’s world (a rural or not-urban basic income)? Or is this just another technocratic dead end?

  3. Ravi writes:

    Riffing off of my apparently disappearing comment (is it in moderation?), I wonder if more direct pandering might work. What about a “Trade Adjustment Income”? These communities are understandably skeptical about the existing retraining-based trade adjustment framework.

    What about just giving people who live in counties impacted by trade (which we at least have good backwards-looking data for) $X/month for Y years? If X is modeled on the desired basic income amount and Y is large (5-10 years maybe), it seems like the sort of entitlement that would naturally grow…

  4. reason writes:

    I’ve been pushing this argument for a long while. I’m glad that I can now link to someone with a bigger megaphone saying the same thing.

    By the way, I think the issue with productivity is overblown. Sure cities have higher productivity, but they also have higher costs (especially land costs) as well. Somehow it doesn’t seem right to me to only look at one side of the ledger. And yes turning London into Mexico city and New York into Sao Paulo doesn’t seem like progress to me. Making more Londons and more New Yorks does. I have lived in Sydney and London and the Ruhr Gebiet and the Rhein-Main-Gebiet and can say the Rhein-Main-Gebiet wins hands down for quality of life.

    But what is not discussed here is that the UBI would spread money about. You don’t just redistribute money between income classes, you also spread money geographically. And money has a multiplier effect. (And not just an economic multiplier, also a social multiplier – I imagine that one of the very first effects of a UBI would be that some run down towns would get a coat of paint.)

  5. reason writes:

    P.S. I didn’t read so carefully it seems, you did indeed cover the regional multiplier effects.

    P.P.S. Another point I have made is that a UBI would probably encourage social entrepeneurship. It would enable people to devote their time to finding innovative solutions to social problems (not to make money, but to make a difference). Idealism would gain new strength.

  6. reason writes:

    Just a small extra point and I’ll be quiet – try calling it a “national dividend” and not a UBI.
    1. It allows it to be phased in.
    2. It allows increased of it to be tied to things like cutting down income tax deductions and increasing sin taxes of various kinds (so it could be used to sell carbon taxes for instance).

  7. Eric Orr writes:

    On a side note, the creaming/brain-drain effect of cities is also the part that people least grok about unskilled immigration. The reason all immigration may be positive is that the barrier for unskilled immigrants means only certain types of people can actually achieve it, especially if they are illegal. A piece of anecdata, I remember talking to a 19 y/o person from Honduras who was doing some day work for me. He had left home where the only path to prosperity were the violent gangs of his slum. He spent 6 months in a Mexican jail and was caught and deported from Mexico twice. He then traveled the infamous ‘el tren de la muerte’ where he saw people die in their attempt to reach the US. He was motivated and a high achiever although uneducated and poor. The image of the lazy immigrant is still the most ridiculous thing about those who have never met one.

  8. Chris Mealy writes:

    Between Social Security and disability, places like West Virginia are halfway to a UBI already.

  9. Nicholas Weininger writes:

    To Chris Mealy’s point, do read Kevin Williamson’s “The White Ghetto” and ask yourself why you think a UBI wouldn’t just create more such ghettoes, given what we know about the ones that actually exist. It’s certainly true that rich people combine capital income with work ethic, but:

    (a) this is partly because of cultural capital built up over generations that both sustains the work ethic and makes the capital income possible

    (b) even among the rich it is far from perfect: there is a reason why the dissipated, depressed layabout ruined by his trust fund is a cliche, and why there is a whole genre of advice articles (probably books too) for rich people about how to restrict your kids’ access to your money so it doesn’t ruin them.

    On the “community” point, the question is why we should try for greater community rather than greater federalism. I, as a Californian, certainly do not feel myself to be “in it together” with Kentuckians, and I don’t see why I should have to. If they’ll leave me alone to live my life according to the prevailing cultural norms of California, I’m willing to leave them alone to live their lives according to the norms of Kentucky. I see no reason why my being forced to pay for their community is going to make them, e.g., less racist or homophobic: they were just as racist and homophobic before their economic decline.

  10. Brett writes:

    @Ravi #2

    A straight-up basic income is probably not possible right now, but we could push for it nonetheless. And while we’re doing that, try for a “basic income” that consists of a basket of access to goods and services. Getting that would be a transition step.

    In regards to the OP, one extra virtue I would add to mega-cities is that they can be far more environmentally efficient – Green Metropolis being a good if aging book on this topic. But then I thought about climate change, and realized it would probably be better if we were spread out amongst a bunch of more equally balanced cities and towns in terms of adjusting.

  11. Scott E Zorn writes:

    I love it.

    I always argue that an inflation tax would be better than an income tax. Printing more money is a flat tax, that doesn’t dissuade anyone from working harder, and avoids the administrative expenses of tax collection.

    I have to agree with ‘reason’ that ‘national dividend’ sounds more appealing than ‘UBI.’

  12. GregvP writes:

    The country in which I live (New Zealand) has a universal basic income for people over the age of 65.

    I haven’t studied the employment effects in detail, but in recent years, following the removal of impediments to working, such as mandatory retirement policies, the employment-population ratio in this age group has been growing strongly.

    I strongly doubt that a UBI would create a nation of slackers.

  13. Effem writes:

    How about a per-hour wage subsidy? Would have the same impact as UBI without the free-rider problem.

  14. Effem writes:

    This dovetails well with the (perceived) need for more infrastructure. Sitting here in NYC, it seems to me that infrastructure projects may actually have negative ROI. The costs are exorbitant, various stakeholders extract extreme rents, and the projects create many years of extra traffic and hassle for millions of people.

    Rather than throw dollars at tier-1 cities, why not invest in tier-3 cities, which have the nice benefit of being geographically disperse.

  15. Bob writes:

    “I imagine that one of the very first effects of a UBI would be that some run down towns would get a coat of paint”

    You can literally do that with a JG though :-)

  16. b. writes:

    To borrow a phrase, collapse is a geographical feature. Collapse is already here, it is just not evenly distributed. What UBI expresses in this context is the necessity to fight national decline collapse wherever it starts, from the beginning.

    In other words, what is completely missing from the Democrit prescription to poverty recipients is an equivalent of the broken windows “theory” that Democrits and Repugs alike love to apply to “fighting crime”.

    Principiis obsta?

  17. James writes:

    Better to ask why it will never happen, because it definitely won’t. Unfortunately “we all” are definitely not learning the lessons of increased income inequality, as the rich are just increasingly able to insulate themselves from its effects.

  18. James writes:

    Additionally, while cities are certainly able to consolidate and thus maximize human economic activity (a basic “feature” of capitalism), that should hardly be confused with the idea of maximizing human well-being. In that sense, UBI confounds its recipients (aka, the “people”) and their “benefactors” (allegedly “the rich”, but actually the Federal Treasury, or whomever ends up footing the bill) alike, in that no one knows who to blame/thank for their drain/largess, in a system designed from the start to assess such things. I can’t imagine that this would go on for long without major political recriminations.

  19. Vanja writes:

    I like this post a lot, but I also have a concern.

    If you assume that cities are productive because of creaming, wouldn’t a UBI make it worse? People for whom the UBI is a small portion of their income would be willing to move to the cities to increase their income. Others would move out of cities to get the most bang for their UBI buck.


  20. BT writes:

    A useful part of the argument is that a Universal Basic Income provides an after-the-fact backstop to those affected by externally-driven changes in employment and change – and unlike “Trade Adjustment Income”, which requires never-before-seen effective Coasean bargaining between communities and governments, it can’t be gamed.

  21. reason writes:

    Vanja @19
    Yes and no. UBI redistributes money geographically – as you say some people will move to where they can afford to live. And they will need services, so at least some jobs will follow them (we are giving them money not resources in kind). So areas that have been totally drained of services will start to demand them. Then you might get a kind of Jane Jacobs type import replacement development taking place. But this ties back to another idea that isn’t mentioned here – people often complain that giving people the resources to live on for nothing, will mean that low income earners might stop working completely. And the answer is “so what” – taking the least motivated and productive workers out of the workforce is going to hurt who exactly? Not their co-workers, and not the people they are working for, so who? And with a UBI we don’t need lots of bureaucracy rich means tested welfare anymore. And with a UBI everybody has an ID card (solves all the worries about electoral registration perhaps). And with a UBI we can set up a public option bank in case people have trouble opening bank accounts. Yet another problem solved. AND AND AND

  22. reason writes:

    James @18
    No, for most people it is a wash. What they mainly get is peace of mind, and less hassle with bureaucracy. We have taxes and welfare now. This just makes it more transparent (not less) and simpler.

  23. Unanimous writes:

    GregVP@12: Those are people who’ve spent 45 years working and who live in a society where work is the main way to participate in society. If a UBI was introduced, over time an increasing number of young people will fail to join the workforce.

  24. Nick writes:

    “Many people will remain, for better or for worse, in the communities where they were raised, rooted by place or family or church, by love, fear, stewardship, or poverty.”

    They will also remain because we subsidize these people’s existence with welfare, disability, and Medicaid. Without these sustaining subsidies, the needs required for basic subsistence would force people to gain marketable skills and move to areas of economic growth be it city or elsewhere. Financing children at taxpayers’ expense would no longer be an option, and these communities that can no longer sustain themselves would die off rather than live-on a sorry existence possible only with government life support. A UBI would further supplant the civic organizations like churches, clubs, and local charities that utilize local knowledge of place and circumstance to truly help those in need as opposed to throwing other people’s money at a problem. A UBI would create permanent pockets of financial and cultural poverty rather than the slowly dying ones we have now, and it would weigh down those of us who have already boarded the prosperity train with higher taxes, more debt or both.

  25. The long buildup before discussing UBI is impenetrable to my mind because it is so laden with unspoken moral commitments. Not to mention the fact that it takes all of one sentence to say: “Government needs to get back into the public housing game.”

    It’s unfortunate. Because you don’t have to subscribe to this strange dogma of productivity as moral good to argue that a UBI solves a bunch of the problems which divide blue cities from red rural areas.

    Also: global warming is a thing you might want to consider. Just I’ve heard it’s a big deal. Maybe a little EO Wilson, too. Or whatever. Arguments about productivity growth are fun too (speaking of masturbation).

  26. stone writes:

    I’m a very big fan of the UBI concept. The only part of your post that I wasn’t in total agreement with was where you advocate a progressive income tax for funding the UBI. Alison Marshal has a compelling argument that a flat income tax together with a UBI actually gives more redistributive oomph with less complexity:-

    “In the graph shown in two tax systems are compared. They have the same top tax rate and the same net revenue, but there is less inequality in the flat tax system than in the progressive one.

    In the flat tax system all income is taxed at the same rate and a Citizens Income is paid as a tax rebate or benefit to all adults regardless of other income. The cost of the Citizens Income is met by the extra tax paid at the lower end of the income scale. Note that this is not just a tax increase for people with low incomes. A high income includes the full range of income on which tax is increased, a low income includes only part of it.”

  27. stone writes:

    I do though have a nagging doubt about the UBI. My concern is whether it is the most politically feasible route to where I’d like things to be. Looking around the world, the Nordic countries seem to have achieved pretty much everything I’d hope for politically. They did that using organised Labour unions with powerful affiliation to democratic political parties. Perhaps we should just try and copy what worked in Nordic countries rather than trying to re-invent the wheel via a UBI? What I struggle with though is how in the UK in the 1970s we did have very powerful trade unions but they seemed to abuse that power rather than using it to construct a viable economic/political structure for the long term. What was behind that difference between the UK and the Nordic countries in the 1970s? Does a proportional representation government system ensure a more cooperative political system rather than the confrontation we get in the UK?

  28. stone writes:

    Several of the comments here have noted that dense city living may be better for the environment. We perhaps should also reflect on how the consumerist treadmill is a danger to the environment. I don’t see it as a bad thing if a UBI takes the edge off the imperative for economic churn.

  29. anon writes:

    > Without these sustaining subsidies, the needs required for basic subsistence would force people to gain marketable skills and move to areas of economic growth be it city or elsewhere.

    I don’t think “moving to areas of economic growth” would be enough to guarantee a decent living to unskilled workers _in the U.S._ Not without the sort of heavy-handed labor market regulation that ends up creating a lot more problem than it solves – maybe unskilled, low-productivity work in Luxembourg or Singapore can be so well-paying that there’s no point in having any sort of UBI or citizen’s dividend, but we in the U.S. are not nearly as lucky! We should just give people the money, and let them choose whether to use it to supplement their wages in a high-cost city, or move to a place where the same amount can stretch a lot further and even sustain them indefinitely in a simpler and more frugal life.

  30. gastro george writes:

    @stone – “What was behind that difference between the UK and the Nordic countries in the 1970s?”

    Some inexpert words. IMHO it’s many things. Cultural – Nordic societies are communitarian, forced in part by the climate into inter-reliance, which the UK is “Anglo-Saxon”. Structural – Nordic unions are organised across industries, while UK unions grew out of the trade-oriented guilds. As such, an industry would have workers represented by many different unions, which represented sectional interests, and owners were quite happy to play them off against each other. Owners were also quite happy with an atmosphere of conflict. It made for a heady mix of barons competing for power.

  31. reason writes:

    Unanimous @23
    Do you have any evidence for this. As I see it we have lots of people have failed to join the formal workforce anyway, and have little chance to change things. They are called an underclass.

  32. reason writes:

    Nick @24
    Just remember that “productivity”, generally means “market value of production/work time”. So in a society with very concentrated income that translates to “making things that rich people want” which is not the same as “making things of value”. If poorer people have more money, then making things that poorer people want will have more value. (And we should also value people’s leisure). The longer we leave a PROXY as the target of our action, the further that proxy will get from what we actually want to achieve.

  33. bill writes:

    In 2015, our income tax produced about $1.5 trillion. A 20% increase in the income tax yields $300 billion. That’s less than $1,000 per year per person. How about a steep carbon tax that is dividended back monthly or quarterly as a UBI?

  34. Chris S writes:

    This is a better way to aid people and discourage fraud than the current system. The only way to enact this is to end almost all other federal welfare programs and make major cuts to the number of of federal employees and military personnel. People must have to buy their own insurance and pay for their own housing. There would also have to be strict limits on immigration. Every adult should get the same money and pay the same tax rate so everybody cares how their money is spent, and so there is no incentive to have children that you cannot provide for. If states want further programs, that is up to them. This idea is something that both sides can find agreement on. What we have now doesn’t work.

  35. reason writes:

    Bill @33
    Yes – now we are talking. But remember the UBI replaces 1-1 things like unemployment benefits, social security, food stamps, basic deduction from income tax (or other deductions). You don’t need to raise income taxes to cover it all.

  36. reason writes:

    Bill @35
    Just to be clear it can be phased in and doesn’t replace all of unemployment benefits or social security (just some of it).

  37. reason writes:

    You could also add a small VAT and then add to the income tax rate for higher incomes rather than having more people required to pay income tax. (P.S. An increase in income tax of 20% means an increase from 15% of income to 18% of income – it is still not very high in international comparison, and we are making the system as a whole more progressive.) The idea in general is not to increase the net take of the tax/transfer system (in fact because we should be saving on administration cost, at least in the long run we should reduce the total take), but to do a robin hood and the same time, avoiding creating poverty traps (although some people seem to think we will replace artificial poverty traps with self-chosen poverty traps). I think self-chosen poverty traps are better than artificial poverty traps from the point of view of real liberty myself, though, but maybe as a pragmatic matter the main difference will not be in the total supply of labor, but in its distribution (with more choosing to work part time). But until we have more experiments, we won’t really know.

  38. reason writes:

    I get the feeling that most of the arguments against UBI are arguments for letting people starve. I remember my mother once appalling me be saying something I guess she heard on talk-back radio “I think it is a mistake that people are just working to have choice in the things they have and not having to work in order to survive”. I heard that and translated it as meaning – “I think more people should be in danger of homelessness and starvation”. I found it particularly rich coming from my mother who is an asset millionaires, who grew up in a rich family and married at 21 and stopped working shortly afterwards (i.e. she was never in the position that she wishes on other people). Is this seriously what people think?

  39. Svejk writes:

    I think Mr Weininger’s first two points above are important to address, but I believe his question regarding the necessity of community illustrates the empathy gap between the current economic ‘winners’ and those left behind. I am a great believer in federalism as both a laboratory for experiments in government and culture and a gaurantor of freedom, as well as a member of several historically despised minority groups. However, I do not think the US can function without at least some bond of reciprocity between fellow citizens engaged in different parts of the experiment. The supposed cultural superiority of Californians is not so much a Calvinist symbol of their evolved morality, but a symptom of their prosperity (and frankly, I’ve encountered just as much racism in San Francisco as in the Rust belt, but of a different sort). More prosperous regions can tolerate greater diversity, and place a higher value on signalling tolerance. I’m skeptical of UBI, but I think that broader geographic dissemination of prosperity will be a boon to tolerance and real diversity, even if it allows some racists to participate in the flourishing.

  40. reason writes:

    so is Nickolas Weiniger advocating high taxes (especially inheritance taxes) to avoid the Trustfund kid syndrome or just advocating that poor people should starve. I don’t really see what point he is trying to make.

  41. Mitch writes:

    +1 on UBI, but this still grates:

    Evacuating the hinterlands into existing, built-up cities would require more housing supply dynamism than stable, prosperous communities seem likely ever to tolerate. We are left with a continuing war between immigration enthusiasts and urban “incumbents” who see themselves as working to preserve their homes and communities.

    Are you literally posting this from the comfort of your rent-stabilized SF apartment?

    Hinterlands voters have a voice at the state level, so it’s not necessarily only up to urban incumbents (mostly immigrant stock themselves) to deign to allow more people to join them.

    I know for a fact that it’d be easier to maintain and extend my professional network living in the city or on the peninsula. And that going to e.g. meetups creates knowledge capital and facilitates finding a better, more productive job fit. Why did VCs keep pouring money into such expensive neighborhoods? It’s not all laziness.

    You’re living at the epicenter of a tremendous knowledge-focused, geographically-narrow economic boom. How is that not the high-order term in your mental model? It’s true that many of the opportunities are industry-specific, but as someone who works with remote team members, I have no doubt that increased housing supply would increase their productivity by making it easier to move closer. Even if immigrants are meaningfully self-selected, knowledge capital increases and spillover productivity benefits are still real. Sorting isn’t productivity-neutral. Even if immigration is selective, more immigration still increases productivity relative to the disaggregated alternative.

    Historically, economic activity was far less concentrated during the decades when America enjoyed its strongest growth. Perhaps technology has changed everything.

    Historically, economic activity was less knowledge-intensive and less specialized. Technology has changed things a great deal in that respect.

    Your revealed preference has been to move away from your historic attachment to your community of origin (and “the land itself”) and join an urban agglomeration that significantly overlaps your skillset. Arguing that it’s not so great seems disingenuous.

    Plus, given the election results, how can you doubt the wrongness of enfranchising geography? Like there’s even a question!

  42. Unanimous writes:

    Reason @31 Only what I’ve seen people do – people I know, kids growing up, countries I’ve visited (villages in the Phillipines, New Guinea, pacific islands).

  43. Mercury writes:

    Raise your hand if you’ve ever given handouts to a family member for an extended period of time and resentment, not productivity and gratitude wasn’t the result.

    I mean, UBI + open borders, what could possibly go wrong?

    Maybe someone should actually ask poor rural folk what one change they would like to see that they think would improve opportunities for themselves. It might not be UBI or what the “experts” think.

    If only poor rural folk could subsidize rich, white, urban “Progressives” with Universal Basic Common Sense…

  44. ED writes:

    Here is a sketch of a relevant model:

    Consider a town as a unit with imports, exports, internal economic activity, and nothing else. In our imagined healthy, thriving town, most people of working age are productive on Day 0: they work as gardeners, doctors, teachers, builders, and so on, and earn good money for it. Unfortunately, no one from outside the town buys their gardening, teaching, building, doctoring, and so on (there are no exports), yet gardeners must buy fertilizer, teachers need books, builders need bricks, and doctors need tongue depressors (there are necessary imports). These are all small expenses compared to the value of the associated services, but there is a problem: Absent exports, the town bleeds money and as days pass, the economy collapses and the town falls into absolute poverty. If only there were a small influx of money from outside to buy those few necessary imports…

    It would be interesting to study the actual economics of communities that lack substantial exports in this sense, and so must pay for imports with money put into circulation by recipients of Social Security, remittances from family members, returns on savings, and so on. What is the ratio of income per capita to money injected from outside? In a community that works anything like this, should we think of a UBI as supporting people, or as correcting a balance of payments problem so that people can get on with productive lives?

    The above suggests a way of conceptualizing (and perhaps even measuring) potential multiplier effects in the economic geography of a universal basic income. In principle, multipliers could be arbitrarily high.

  45. reason writes:

    @43 I have children (and was a child) so my hand goes up. (I wonder what sort of a parent you are?)

    UBI could be coupled with a citizenship or permanent legal residency requirement and open borders is not part of the package but a different issue. UBI is not a featherbed, and unlike means tested benefits it doesn’t reduce the incentives to work.

  46. reason writes:

    Yes this is correct. But Jane Jacob in economies of cities suggested that often what happens is that cities develop around a single export industry (often just providing a transit port or trading center), then find some services and product to replace and then often start exporting some of those services and products. Cities become catalysts for innovation and development. So some cities can thrive long after their original purpose has disappeared (e.g. gold rush San Francisco or Melbourne).

  47. reason writes:

    oops left out an important word:
    .. then find some services and product to replace IMPORTS and ….

  48. reason writes:

    In fact thinking about what ED wrote and my reply @46, the effect of UBI could be quite sensibly compared to a gold rush effect.

  49. ED writes:

    I like Jacobs’ work, and expect that the UBI effect would often enable communities to thrive, follow the path she outlines, and rise further, when a decaying center could not. My qualitative mental model of the economic dynamics of UBI in export-poor communities suggests that the geographically distributed leveling-up of income and economic activity could be even stronger than I’d first imagined after reading the OP (which of course is what suggested the idea).

    Randy has highlighted a very important implication of UBI that could, I think, substantially affect how people think about its human, economic, and political implications. Seeing UBI as an enabler of local employment, rather than as a substitute, will be a major conceptual shift for most people. I hope that he and others take this line of thought further and push it deep into the Overton window.

  50. reason writes:

    I have been pushing this point for some time, ever more vociferously, but nobody seems to have noticed. Just to reassure Randy I’m not going to claim prior art.=) Who knows, maybe he saw my comment somewhere and started thinking about it.

    I thank Randy for now helping to push it. (P.S. Interfluidity has only occasional posts. My local pub so to speak is

  51. reason writes:
  52. Nick writes:

    @Reason 38 and 32

    The poor don’t starve, when food or other essential resources are scarce, they turn to family, churches, community groups, and other private charities. A huge problem with a UBI and with most government well fare is that it lessens the need for such social and civic networks—government welfare takes a symptom, poverty, and materialistically addresses the symptom while leaving the underlying issue, cultural decay, lack of caring community, and the desire to educate oneself, untreated. Social and civic networks are the escape hatch for the poor who wish to educate themselves and become self-sufficient to work their way to a better life. The UBI would destroy the institutions that make up this path to success. Additionally, by reducing the incentive to escape poverty, the UBI would create a permanent underclass of the least ambitious. I am not arguing that all poor are lazy or unambitious as there still is a great amount of social churn in the US, but the UBI reduces the incentives for the poor to take proactive steps to alive their plight and it weakens social and civic bonds which allow the poor to change their circumstance.

  53. Jon writes:

    Would a safety net from a UBI not free one up to innovate and create since the price of failure is not as great as under our current regime? If not, please explain the success of the trust fund Trump siblings and there willingness to work and create in spite of a UBI greater than anything that would ever be proposed. Trump’s own “meager” $1 million parent funded initial stake seems to me the ultimate argument in favor UBI.

  54. stone writes:

    Nick@52, I guess I instead see government as a key part of the “social and civic network” that you note is vital for societal well being. From what I can see, social and civic network building is performed most successfully where it is the state that is doing much of that job. The countries with great education statistics, lowest child mortality rates, low crime and corruption etc are “big government” countries aren’t they? Your assertion doesn’t seem to tally with what actually happens in the real world. When government keeps out, we instead get crime ridden slums with all the conflict and waste that brings.

  55. stone writes:

    Mercury@43, I’m also not an advocate of open borders. Leaving that issue and getting back to the UBI – I actually preferred the term “citizens’ dividend” because that emphasizes the analogy to a dividend received by shareholders of a company. Companies pay out dividends to shareholders without much resentment in either direction. After all, a large part of global earnings is gathered as returns to capital by passive owners who haven’t done anything to “deserve” those earnings. Likewise, a citizens’ dividend is received by the population as a consequence of just being citizens of a well functioning nation.

  56. reason writes:

    “A huge problem with advantage of a UBI and with most government well fare is that it lessens the need for such social and civic networks”, freeing people from meddling busybodies.

  57. reason writes:

    Try again
    “A huge problem with advantage of a UBI and with most government well fare is that it lessens the need for such social and civic networks”, freeing people from meddling busybodies.

  58. reason writes:

    stone @55 agree 100%

  59. reason writes:

    By the way Nick W. you and Mercury @43 should perhaps talk to each other and get your story straight. And perhaps I should point out as well that part of the advantage of a UBI is that it helps carers, who are otherwise carrying an often debilitating burden. And yes I personally do not like a lot of private charity, that in my view is often a paternalistic misuse of power. (Paternalistic, now where do I know that word from.)

  60. reason writes:

    In case anybody else finds Nick W’s ideas attractive, I thought I would just point out that relying solely on social and civic networks implies shifting the burden to already stressed communities so that they have even less chance to accumulate the capital needed to improve their situation. If you want to know how this all turns out, there is no need to guess, this policy has been tried before and Charles Dickens wrote extensively about it, so much so that the resulting social conditions bear his name. Have they stopped getting people to read Dickens in school now?

  61. Mercury writes:

    stone@55: Dividends are surplus capital returned to shareholders which hardly describes the Federal government’s current financial condition.

    I assume you’d prefer to generate surplus funds by increasing taxes and not eliminating expensive government social programs which the UBI is supposed to be superior alternative to?

  62. Mercury writes:

    reason@59 I think the beneficiaries of private charity would beg to differ.

    When the world needs help (Chilean mining disaster for instance) they appeal to and usually receive US private charity. They tend not to ask the EU government for emergency aid because expectations in that area are justifiably quite low.

    How is private charity (many individuals voting with their wallets) paternalistic but centrally planed wealth redistribution (a few faceless bureaucrats distributing funds) not?

  63. reason writes:

    Mercury @62
    The issue is that centrally planned redistribution is RULE based, whereas private charity is arbitrary and very often based on sentimental evaluation which tends to encourage self-deprecation. The most pernicious effect of private charity as often seen in third world countries is self-mutilation to encourage pity. The problem is that private charities chose who to favor (often based on irrelevant criteria) and so cater as much to the needs of the giver as to those of the receiver. It is the old deserving and undeserving poor issue (although it is worse because it also encourages being in your face rather than modestly staying in the back ground). As I said, read Dickens.

  64. reason writes:

    Mercury @61
    Tell me, where do you think money comes from in the first place? I’m just curious about how you would answer.

  65. reason writes:

    (P.S. However I don’t want to say that you shouldn’t have both private charity and public social insurance, they can sensibly operate as complements. But I would never want people to end up completely dependent on the fickle and potentially exploitative private charity.)

  66. Mercury writes:


    Wealth is created through the miracles of industry, innovation and trade and it’s creation (or destruction) is not a zero-sum game. More industry, innovation and trade generally = more wealth.

    Money doesn’t need to “come from” anywhere, it is simply an agreed upon medium of exchange, be it a precious metal, paper or information. Any type of money only has value as long as a sufficient number of people agree and act as if it does.

    Rules can be heartless and counter-productive too. Government programs that have (since the 1960s) paid out more to fatherless children have had the perverse result of creating more fatherless children among demographics that suffer most from such a lack of family structure.

  67. reason writes:

    1. There are almost no fatherless children. There are children with separated parents, which correlates mostly with young mothers and poverty. Famously detailed studies have indicated that what preceded an increase in single parenthood was a decrease in employment prospects for less educated males.
    2. What really creates fatherless children besides poverty is warfare.
    3. Yes it is true rules can be heartless and counter-productive, that is why we subject the rules to democratic review.

  68. reason writes:

    @66 Your answer regarding wealth is an odd one (most wealth is natural wealth – still) and science plays at least as big a part as the “miracles” of industry and trade. But I didn’t ask about wealth, I asked about money and I asked specifically where it comes from – not where it theoretically could come from. This sort of reminds me of Kahneman’s point about the mind not voiding difficult questions, but finding an easier one to answer instead.

  69. reason writes:

    oops – “not voiding” should have been “avoiding”.

  70. Mercury writes:

    @68 I think you’re the one being obtuse here.

    1. Yes, I mean children who grow up in homes without their fathers. Duh. “Famously detailed studies” my ass. Look up the number of black children in the US born out of wedlock pre-Great Society vs. now. Show me an ethnic group in America that has collectively and generally improved their socio-economic status over time and I will show you an ethnic group that has been characterized by intact family structures over the same period.

    2. I don’t think warfare has been a significant factor for the increase in single-parent homes in the US.

    3. More and more rules/regs are being created further and further apart from democratic review in this country….which has led to Mr. Trump’s election. So, hopefully you’re still correct – Trump seems to be doing a lot of such reviewing lately and he’s not even in office yet!

  71. reason writes:

    1. Correlation and causation?
    2. But if you believe that, then why are you using the increase in single-parent homes in the US as an argument AGAINST basic income which solves this problem (and others)?
    3. Didn’t you and Nickolas Weininger even notice that you each used diametrically opposite arguments against basic income, either may have validity but they both can’t be simultaneously valid.
    4. You have consistently conceded that private charity is not perfect, and then argued against public welfare because it is not perfect. Is it not possible that:
    a. They are complementary (as charities that actually deal with the poor consistently argue)
    b. Improvements are possible?

  72. Mercury writes:

    1. Yes, both. See previous #1.
    2. If you have a proven model for successful child rearing that costs nothing why search for an expensive, weak substitute? Money is not a substitute for an intact family structure at scale. Find me three young children who prefer Mommy + more money to Mommy + Daddy.
    3. No, I didn’t and I don’t know who NW is. At some level teaching someone how to fish is a better long term solution than just handing out fish forever. UBI basically gives EBT cards to everyone and allows them to buy anything. If the food stamp program had been a bigger boon for society in the last half century UBI would be worth considering but that isn’t the case. Also, please explain how the politician who promises/delivers an increase to UBI doesn’t win every election and how that won’t end in disaster.
    4. Yes, part of the function of government is to provide services and functions that aren’t better accomplished by private actors but UBI isn’t one of those things. Also, private charity should be incentivized by the state if for no other reason than many individuals voting with their wallets tends to deliver better outcomes (especially in the social domain) than a few individuals allocating resources, even if they went to Harvard.

  73. reason writes:

    Mercury – re point 2 – you don’t understand do you – basic income gives no incentive for single parenthood.

  74. reason writes:

    Mercury 3 Stupid argument – why is inflation such a scare word today. You can increase the basic income but you can’t increase its real value. You underestimate the electorate (yea – I know it is hard to believe at the moment but it is true).
    4. Is just unsupported (and in my view inaccurate) assertions. Clearly the private market has failed to provide economic security. People voting with their wallets have all sort of co-ordination and information problems (otherwise fraud wouldn’t be common).

  75. reason writes:

    I just thought I’d add the obvious point re 4 – “people voting with their wallets” assumes that people have something in their wallets in the first place (which is the problem we are trying to solve here). So you are sort of saying – assume this problem doesn’t exist, then here is a good solution for it. But tell me – why should the already rich have all the votes on this issue? To the extent that power is zero sum game, we are asking people with power, some of whom got that way because they are power hungry to voluntarily share it. I don’t think history encourages us to think that works. It is much better not to let the power get concentrated in the first place.

  76. Mercury writes:

    4. Assume the people voting with their wallets are the same people you plan to extract money from to fund UBI. Central planning, the impetus behind a UBI scheme, is more or less the definition of concentrated power so, less central planning, less concentrated power. I’m glad we can agree on something.

    3. Whether is begets inflation or not, the majority will vote for more UBI and one way or another it will eat into GDP, cause stagnation and worse. Look at the last 20 yrs. in Europe which doesn’t quite have UBI but similarly more socialized economically.

    2. It’s pretty hard to raise a kid with zero income (trust me), UBI > 0, therefore zero income becomes less of an impediment to single parenthood.

  77. reason writes:

    76 It is clear that you are not arguing in good faith. You are to quote Galbraith – “engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”

  78. stone writes:

    Mercury@76, For me one of the attractions of a UBI is that it really isn’t anything like central planning. Each individual decides what to spend their own UBI money on. It brings to bear the detailed information about personal circumstances that (as you point out) is so hard for central planners to discern.
    I’m puzzled about your concern that voters would vote for excessively large UBI payments. We haven’t yet persuaded voters to vote for ANY UBI program. Are you worried that if a precedent was set, then we would get a stampede? That seems to suggest that you expect a UBI to (at least initially) be so successful that voters then get carried away with it???

    Taking a wider view, I see a UBI as being a means to economic democracy. As you say, extreme central planning is the antithesis of economic democracy. Under central planning (as in say North Korea) just a few central planners determine what everyone has to do. Such a system fails to tap into the knowledge that each individual has about their own personal talents and wants. People become demotivated and miserable and massive waste results. BUT that exact same failing can also come about as a consequence of excessively concentrated economic power through wealth concentration in a capitalist system. It perhaps manifests slightly differently with a large segment of the population just being left on the sidelines because they are superfluous for the wealth holders. Anyhow, IMO the success of our capitalist system depends of economic power being sufficiently dispersed. IMO the post WWII economic flourishing is testament to how our system works best when it has had something of a reset with a flattening of private economic power imbalances. My hope is that a UBI could be a peaceful, harmonious way of achieving that sustainably.

  79. Mercury writes:


    I don’t have a crystal ball, UBI might actually work, at least under certain circumstances, I just don’t think there is any evidence to believe that it would, especially under current circumstances. It’s hard to imagine history books one day proclaiming: “And then the government stated handing out free money and Society improved immeasurably…”. I mean, what experiences in the real world give you confidence that something like this would be the outcome of UBI?

    Yes, there is some segment of society who would probably leverage the crap out of UBI and use it as capital to fund a long term plan to improve their lives and move up the socioeconomic ladder. I like to think I would be among them. But there is almost certainly a much larger portion of society who would use UBI as a license for indolence and sloth, especially as they would (today) be abetted by cheap, digital escapism. If I had to bet I would put my money on the outcome that group 1 would be composed of people who come from nuclear families that value and pursue education and group 2 would be composed of people who…..not so much.

    This being the case it should be obvious that it is a better idea to try to incentivize group 2 to adopt the values and habits of group 1 instead of just giving them (more) money in the form of UBI. You can probably count on UBI for a medium sized basket of short term and narrowly focused benefits but ultimately it’s a Hail Mary attempt at an easy fix for a set of complex, long-standing and systemic social problems.

    Of course 51% of voters would vote for greater and greater UBI payments. And if for some reason their cultural values prevented them from doing so, government would find a way to import a sufficient amount of new voters from foreign cultures and with lower expectations who weren’t so encumbered. Does any of this sound familiar?

    I think you could prove me wrong by identifying a significant number of people across different strata of society who, in the past, have advanced themselves and their progeny as the result of UBI type government largess.

  80. Nick writes:

    A few areas of agreement, Stone and Reason. Not all private charity is great, in fact a lot of it is serves to nurse reputations or consciousness of wealthy funders and founders. Private charity can also be innovative and provide a level of personalized, empathetic assistance that government will never replace. With large welfare states, some countries, albeit very small and culturally homogenous ones, manage to do well on certain metrics of wellbeing. The poor had a much worse shake in Dickens’ time and I along with most any decent person would never want to return to those levels of destitution.
    Although: Dickens lived 200 years ago in a society many, many orders of magnitude poorer than our own.

    Constrained by the limitations of resource and time, the goals of these charities also differed from the goals of a UBI: that goal presumably being to reduce poverty. I simply don’t find the mechanisms presented here for how a UBI would accomplish that goal convincing. The idea that people would move to cheaper areas, I buy, but the idea recipients would “go back to school, or care for children and aging parents, or try starting businesses” while of course true to some extent, I do not accept. I believe the distribution of consequence will be heavily weighted towards paying people to “sit around and collect government checks” because the UBI would in fact incentivize this behavior. The biggest incentive to educate yourself and to get a job is to better your circumstance and a UBI destroys that incentive. A UBI would also be very, very expensive and require higher taxes or debt or both which would decrease the thing that does decrease poverty, growth.

    Are there UBI proposals that don’t create the incentive effects I worry about or other issues with regard to political economy?

  81. reason writes:

    Nick @80
    “I believe the distribution of consequence will be heavily weighted towards paying people to “sit around and collect government checks” because the UBI would in fact incentivize this behavior. ”

    It does not such thing. It ENABLES such behavior but that is a long, long, long way away from incentivizing.

  82. reason writes:

    @80 “A UBI would also be very, very expensive and require higher taxes or debt or both which would decrease the thing that does decrease poverty, growth.”
    Again what the last few years have clearly demonstrated is that higher taxes and debt DO NOT lower growth. Did you go to sleep in 1990 and just wake up?

  83. reason writes:

    @80 Again – and besides what if we as a society decide to take the combination of sustainability and an understanding of the implications of exponential growth seriously and decide that more growth is neither desirable nor possible. What is our plan B?

  84. Mercury writes:


    Ahh,….facing defeat by logic, common sense and the accumulated wisdom of Western Civilization, the true colors finally unfurl:

    The Human Condition can no longer improve. This is as full as the glass will ever get. Liberty and an obsession with individual potential have brought us to this current state of emergency. Give us total dominion over your lives and we will allocate all resources according to what is fair, reward the worthy, punish dissenters and keep Mankind and the planet itself from falling off the knife edge and into disaster.

  85. reason writes:

    @84 ?????
    What have you been drinking? Are you really try to say, if pure Classical Liberalism can’t work (say because of you know – externalities – the only alternative is the extreme opposite? Seriously? Me, personally, I believe in trying to improve what has been shown to work – a mixed economy.

  86. reason writes:

    To make it more obvious, I take it you have sometimes landed in a traffic jam. A traffic jam is a classic example of everybody acting rationally in their own interests and together managing to achieve the opposite of what they set out to do. It is a fact of life that sometimes their are perverse incentives. Or consider bison hunting or the extinction of carrier pigeons or dodos.

    It is also rather perverse that ideological classical liberals like to see property rights as the answer to providing liberty. Property rights are EXCLUSIVE rights to some resource, so in the name of liberty (of the owner alone) they RESTRICT the rights of the majority of mankind. And some classical Liberals seem to think that this privilege should not only be granted free of charge, but that somebody else should carry of the cost of protecting this privilege. It may well be that the advantages of this arrangement outweigh the costs, but this is an empirical judgment not an a priori judgment.

    The third rather obvious point is that the “us” in your last sentence and the “we” in the last sentence are, at least in principle, one and the same. I think it is perfectly reasonable that people have a say in what rules they want to live under. Whether you personally like that or not.